The Importance of the Non-Investor Board Member

Advice to the VC Community

Mark Lonergan, February 4th, 2020

I had a fas­ci­nat­ing meet­ing today with a Gen­er­al Part­ner at one of the Valley’s top ven­ture cap­i­tal firms. He asked me a sim­ple ques­tion: What advice do you have for me as the VC mar­kets con­tin­ue to shift”?

My response might sur­prise you: Recruit a non-investor indus­try expert – ide­al­ly an active senior line exec­u­tive in an admired pub­lic com­pa­ny – onto the boards of your top 3 – 4 port­fo­lio com­pa­nies.” There are four rea­sons for this sim­ple move:

  1. CEO Men­tor­ing A statured senior exec­u­tive will have great cred­i­bil­i­ty with your company’s Founder-CEO. S/​he will help coach/​mentor your Founder in ways that investors cannot.
  2. Pos­i­tive Brand­ing The addi­tion of a real­ly cred­i­ble pub­lic com­pa­ny leader will tell the world that your com­pa­ny is going places.
  3. Rela­tion­ships This board mem­ber will pro­vide intro­duc­tions to dozens of impor­tant thought lead­ers, includ­ing clients and part­ners for the future.
  4. Pat­tern Recog­ni­tion The right pub­lic com­pa­ny exec­u­tive will under­stand how to reshape your com­pa­ny for ulti­mate IPO or sale – at max­i­mum valuations.

To make this work, you need to ensure that your Founder-CEO is bought in to sup­port the board addi­tion. Like­wise, oth­er board mem­bers will need to sup­port this move for the new non-investor board mem­ber to have impact. The cost of this move is typ­i­cal­ly less than 1% of the company’s stock vest­ing over four years. And the impact can be…